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How to Become a Billionaire and Avoid Paying Taxes

There is a court case going on in the US right now that is a Master Class in how super-corporations scam the tax system.

The IRS is prosecuting distribution giant Amazon for more than $1.5 billion in taxes. It says that the corporation uses a complex web to transfer assets to a Luxembourg holding company which then transfers huge sums to a second Luxembourg company, supposedly in royalty fees – thus reducing Amazon’s overall taxable income.

The use of subsidiaries in low-tax jurisdictions is becoming an all too common theme for large corporations. Later this year, the Canada Revenue Agency will be meeting mining giant Cameco in court arguing that its Swiss subsidiary was set up for the express purpose of lowering Canadian taxable income.

Newsweek Magazine has an in-depth story on the Amazon case which is well worth the read.

One of the more disturbing aspects of the Amazon case is how tax avoiding corporations and their executives have inveigled themselves into government.

The court documents show that Jean-Claude Juncker had meetings with top Amazon tax executives while he was president of Luxembourg. He is currently president of the European Commission, an organization that is supposedly committed to ending tax evasion. The IRS argues that Juncker made secret tax deals with the corporation enabling them to avoid US taxes. Tax advocates and the International Consortium of Investigative Journalists maintain that the secret Luxembourg Leaks documents show those kinds of deals went on all the time, including with Google, Apple and McDonalds.

In the meantime, Amazon’s owner Jeff Bezos is personally worth approximately $50 Billion. He owns the Washington Post and even sits on a panel advising the Pentagon. Business journalists write articles about his acumen, his vision and his leadership.

Whether the IRS will be able to poke a hole into his tax schemes doesn’t seem to weigh heavily on his mind.